Second China 301 list official and CBP to begin collection on August 23rd.

Second China 301 list official and CBP to begin collection on August 23rd.

The determination by the United States Trade Representative of a Section 301 finding against China has so far yielded three distinct lists of products that the Administration has imposed an additional 25% in duties upon at importation. Regardless of whether these items were dutiable or duty-free, they are subject to an additional 25% duties payable at the time of entry.

The first list, everyone recalls, became effective in July. You can see our previous post here for all the details.

Earlier this week after a public comment period, the second list (or ‘annex’) was published covering an estimated $16 billion in imports. Unlike the first list which saw a significant number of products removed, the second list removed only five HTS numbers, keeping more than 98% of the ones initially proposed. CBP will begin collecting duty on items entered on or after August 23rd which are on this list. As with the first list, there will be an opportunity to request an exclusion which, if granted, can be used by all importers of that HTS.

The third list which contains a significant number of end-consumer items such as luggage, handbags, sporting goods and bicycles is still open for public comment through September 6th. While this list was announced with the intent to carry only 10% in additional duty, comments by the USTR indicate that the Administration is contemplating raising that to match the 25% of the first two lists.

The impact on importers of all three of these lists cannot be understated. Coppersmith wants our importers to keep two things in mind with these three lists.

Bond sufficiency

An annual continuous bond with Customs is calculated at 10% of the estimated duties and taxes that are paid within a calendar year. Between ACE and the centralization of bond management, they keep a closer eye on what is called “bond sufficiency” – or when a bond reaches its maximum obligation (not unlike reaching a credit limit), then imports cannot be entered under that bond until the bond amount is increased.

The 25% duties from China, as well as the additional duties on steel and aluminum from other countries, are obligating bonds at a more accelerated rate. Coppersmith will work with our importers to forecast what kind of additional bond may be required and work with you to get a higher bond in place. We caution that with additional bond obligation comes the potential to require additional collateral or financial instruments to secure the higher bond amounts.

ACH duty payments direct to CBP

We cannot stress enough that the third list is extensive and touches on nearly every type of consumer good, foodstuff, toy, product and part imported from China. If this third annex goes into effect next month, as predicted, it will mean that duties will be increased significantly. Coppersmith can enable to you to pay those duties directly to Customs without having to pay any additional fees for the advancing of those funds. We can also help you apply for the Periodic Monthly Statement program to help protect your cash flow.